COMPARATIVE STUDY OF FINANCIAL RATIOS DURING CONVERGENCE PERIOD FROM GAAP TOWARDS IFRS IN INDONESIA

Abstract

ABSTRACT IAI (The Indonesian Institute of Accountant) has implemented convergence process towards International Financial Reporting Standards (IFRS) since 2010 in a gradual manner and this process was expected to be completed in 2012. The objective of this study was to observe the difference in financial ratios, if any, during the process of change from the previous standard, Generally Accepted Accounting Principles (GAAP), towards IFRS in Indonesia by utilizing gray's comparability index. The Gray's index result were displayed in graphs and analyzed by statistic descriptive method. In addition, Wilcoxon signed-rank test was employed to statistically examine the difference between GAAP and IFRS financial ratios values. Objects for the study were 90 non-financial companies which are listed in Indonesia Stock Exchange (IDX) for the years of 2010 and 2011, which did not applied IFRS in the financial year of 2010 and have applied IFRS started from the financial year of 2011. Only financial report for the year of 2010 was used. The one published in 2011 represents GAAP financial report, and the one published in 2012 represents IFRS financial report. Investigated financial ratios were solvability, profitability, and liquidity ratios. The results showed that there exists a difference in liquidity ratio between GAAP and IFRS, while the differences in the other two ratios are immaterial and insignificant